Correlation Between Shanghai Yanpu and Ningxia Xiaoming
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By analyzing existing cross correlation between Shanghai Yanpu Metal and Ningxia Xiaoming Agriculture, you can compare the effects of market volatilities on Shanghai Yanpu and Ningxia Xiaoming and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Shanghai Yanpu with a short position of Ningxia Xiaoming. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai Yanpu and Ningxia Xiaoming.
Diversification Opportunities for Shanghai Yanpu and Ningxia Xiaoming
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shanghai and Ningxia is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Yanpu Metal and Ningxia Xiaoming Agriculture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ningxia Xiaoming Agr and Shanghai Yanpu is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Shanghai Yanpu Metal are associated (or correlated) with Ningxia Xiaoming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ningxia Xiaoming Agr has no effect on the direction of Shanghai Yanpu i.e., Shanghai Yanpu and Ningxia Xiaoming go up and down completely randomly.
Pair Corralation between Shanghai Yanpu and Ningxia Xiaoming
Assuming the 90 days trading horizon Shanghai Yanpu is expected to generate 1.18 times less return on investment than Ningxia Xiaoming. But when comparing it to its historical volatility, Shanghai Yanpu Metal is 1.52 times less risky than Ningxia Xiaoming. It trades about 0.04 of its potential returns per unit of risk. Ningxia Xiaoming Agriculture is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 984.00 in Ningxia Xiaoming Agriculture on October 8, 2024 and sell it today you would earn a total of 104.00 from holding Ningxia Xiaoming Agriculture or generate 10.57% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Shanghai Yanpu Metal vs. Ningxia Xiaoming Agriculture
Performance |
Timeline |
Shanghai Yanpu Metal |
Ningxia Xiaoming Agr |
Shanghai Yanpu and Ningxia Xiaoming Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Shanghai Yanpu and Ningxia Xiaoming
The main advantage of trading using opposite Shanghai Yanpu and Ningxia Xiaoming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shanghai Yanpu position performs unexpectedly, Ningxia Xiaoming can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Ningxia Xiaoming will offset losses from the drop in Ningxia Xiaoming's long position.Shanghai Yanpu vs. Duzhe Publishing Media | Shanghai Yanpu vs. Mango Excellent Media | Shanghai Yanpu vs. Heilongjiang Publishing Media | Shanghai Yanpu vs. Changjiang Publishing Media |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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